“Why gas?” Good question…

In Australia back in 1990, we were subjected to a saccharine , family friendly bit of advertising extolling the virtues of “natural gas” for cooking. The tag line? “Why gas? Well just because!”.

Twenty two years later, you could be forgiven for thinking that energy policy makers had been locked in a room and shown this commercial non-stop, Clockwork Orange style. Because whenever you look for an answer to the question “Just what the hell are we going to do next about energy?” the answer seems to come back, regular as, well, clockwork.

Gas.

As is often the case with Ben’s keen observations of his world, my thoughts were provoked by his post. I believe there are several reasons why natural gas has become such a popular and politically correct answer to our near term future energy needs. Here is a slightly edited version of the response that I posted on Ben’s blog.

Ben – the primary reason that gas is so “popular” these days is that it is being marketed by some of the most skilled communicators in the world who are backed by the deepest pockets on the planet.

Multinational petroleum companies figured out several decades ago that natural gas was the near future fuel that best fit their existing core competencies. They could keep on drilling in difficult geologies, keep making deals with despots, keep running pipelines and tankers, and keep encouraging utilities to build cheap machines that needed a continuous supply of fuel.
Compared to oil, gas has serious physical limitations – like the fact that natural gas tanks can only contain about about 1/3 as much energy per unit volume as gasoline tanks even if you are willing to build tanks that can withstand 10,000 psi. Unless someone builds the pipelines, methane gas is an explosive, hazardous byproduct of both coal and oil extraction operations that needs careful attention and flaring in order to save the lives of miners and drillers.

However, the petroleum company marketers seized on the “environmental” benefits argument as something that they have been using in their market share battle against coal since the days when they convinced Churchill to convert the British Navy from domestic coal to oil extracted from imperial colonies. As long as the gas is properly treated and such contaminants as hydrogen sulfide are removed, it burns quite cleanly, even allowing the use of open flames inside homes without chimneys.

The “environmental” argument for gas capitalized on making use of existing corporate core competencies – the oil & gas companies already controlled a number of large “astroturf” organizations that had been established long before the original basis for the term had even been invented.

Petroleum companies have also had a major presence in the opinion influencing commercial media since the days when the Texaco Star was as frequently seen as Milton Berle. (I am not sure how well that allusion will play down under, but here is video that might help make my point)

Some people wonder why the major multinational energy companies virtually ignore the existence of nuclear energy. The answer is that it is so vastly different in terms of energy density, intellectual input required and machinery used in the process that oil & gas companies have no natural advantages (other than massive access to capital) that would help them prosper in an atomic focused world.

A world that allowed the use of atomic energy on a risk equivalent basis with petroleum would be one in which petroleum companies would be about as profitable as silicon or aluminium raw material suppliers.

Their product will always remain useful as an input to a number of industrial products; it is almost irreplaceable as a fuel in weight sensitive transportation applications like aircraft and personal automobiles. However, as bulk fuels, the market value of oil and natural gas would be quite diminished by the existence of an unlimited supply of emission-free nuclear energy from thorium and uranium that costs somewhere between 1/1000th to 1/10th as much per unit heat as the current market price for petroleum products.

34 Responses to “Why is natural gas such a popular answer to energy challenges?”

– Natural gas burns much cleaner than coal. So those concerned about air pollution like it much better than coal. Natural gas also produces less greenhouse gas emissions – though not much less if methane leaks in the natural gas chain are included. Nuclear is even cleaner in air emissions, but that is downplayed by the antis by talking about radioactive waste that is somehow magically a waste and a problem (neither are in fact true).

– Many people have natural gas furnaces to heat their homes and hot tapwater. So they are familiar with it. That makes them more supportive and not scared. By contrast, they don’t have nuclear plants in their basements and in fact, many have never been to a nuclear plant. One fears what one does not know.

– Natural gas can be sourced from wells, piped to customers, and then creating a constant revenue stream. It is exactly the same business model as oil. So oil companies like it.

– Natural gas boilers and turbines are cheap, because burning gas is easy and little pollution control is required. So utilities and industry like it, too.

So you see everyone has a reason to like natural gas. Of course, there are flies in the ointment. We cannot produce enough natural gas to displace all coal and oil, globally. Most natural gas comes from nice areas like Russia and the Middle East. And even if we’d source more of the gas from our own areas (fracking and such) or would not care about where it comes from, we’ll need all of the natural gas to power ships and aircraft, and to make fertilizer, with oil production declining. That leaves no natural gas for generating electricity!

In the best case models, natural gas emits half the greenhouse gases as coal. But even that won’t be enough to make a substantial difference in global warming in the 21st century, according to this study:

Myhrvold and Caldeira found that to achieve substantial benefit this century, we would need to engage in a rapid transition to the lowest emitting energy technologies such as solar, wind, or nuclear power – as well as conserve energy where possible. The researchers found that it takes much longer to curtail the warming of the Earth than one might expect. And in the case of natural gas—increasingly the power industry’s fuel of choice, because gas reserves have been growing and prices have been falling—the study finds that warming would continue even if over the next 40 years every coal-fired power plant in the world were replaced with a gas-fueled plant.

So, I know many of you guys are in this field and probably cant answer this in public.

But what is up with NRC Chairman Gregory Jaczko? I don’t know what im talking about half the time but he seems totally out to lunch on carbon, climate and pollution issues as well as safety and construction issues regarding nuclear power.

As a matter of fact he seems more interested in promoting a populist agenda than advancing real safety and technology he is charged with advancing in general. Hes hardly leadership material.

But like I said I don’t know the field and Im far left on climate issues as well.

But from his comments and his activity It just seems weird someone like that could be chairman.

It kinda reflects bad on the people that put him there I feel. Honestly he seems like more of an encumbrance to safety and new technology than a benefactor.

Chairman Jaczko was appointed as a political favor for Senator Harry Reid for whom Dr jaczlo worked. peior to that he worked for Rep Kerry, a fervent anti-nuke. Do a search of this site and you will find plenty of comments about chairman Jaczko, few of them complimentary.

By contrast, they don’t have nuclear plants in their basements and in fact, many have never been to a nuclear plant. One fears what one does not know.

This is why I recommended the idea of a nuclear power museum which would be a decommissioned nuclear plant but instead of wrecking it, somehow (power wash?) the radiation, remove all the fuel, and set the place up with exhibits to handle museum guests. That is probably the only way I would ever see the inside of one.

Meanwhile, I am in favor of gas for cooking, grilling, hot water, heating and drying. Cooking with electricity, especially with one of the smoothtops, is no fun at all. There is a reason why the best chefs cook with gas.

There comes a point, from a utility’s perspective that one fuel source becomes more attractive than others. I worked for a large design build firm and during the 90’s and early 00’s (I began there fresh out of college in 2000) the only thing they were building was natural gas units. The capital costs were very low, permitting was strait forward and (relatively) quick and the fuel was cheap. Additionally, there would never be the need to retrofit plants to deal with pollutants. The plants had small footprints, so you could discreetly build them anywhere avoiding all sorts of NIMBY issues. All of this created the kind of capital projects the utilities love. As the 00’s progressed and gas prices began to skyrocket, utilities looked towards coal because the price incentive for the fuel cost became too large to ignore, but that (coal fired generation) was a short lived trend.

If and when the nuclear industry can get past its prior scheduling and delivery issues that plagued the industry in the 70’s and 80’s, there will be a renaissance. Good execution at Vogtle is going to set a precedent for future projects. But even if the utility side gets its act together and can execute, without a stable regulatory framework to work under, nuclear will languish on the back burner for the foreseeable future.

Japan’s economy minister said Monday two nuclear reactors tentatively met government safety standards even though completing improvements will take several years, paving the way for final approval for their startup soon.

The only compelling reason not to use natural gas is the environmental costs; otherwise it beats nuclear hands down in every other category. This is the simple truth and we would be best to face it. The argument that once it has established itself as the major fuel, the current low price will be ratcheted up, while valid, is not one that will move utilities (who will just pass the cost on) and is difficult to sell to the general public which is still under the impression that nuclear is more expensive yey.

The only plausible argument we can table is that it is not made to shoulder its external costs both in GHG and damage from fracking. The latter seems to have garnered some notice and there is movement in that area to limit the process, but in the end that will not be enough. Unfortunately that leaves us with the difficult argument of climate forcing and all that entails. Nevertheless this is not an impossible task by any means. Evidence is mounting to support the notion of AGW and it is beginning to capture the public’s imagination.

There is some precedence here that might give us some hope. Back in the Sixties, the nascent environmental movement was focused on water pollution and looking back one can see that there are several parallels with the battle we have today. One of the major objections to stricter effluent control laws was the threat of job loss if industrial concerns were forced to assume the expense of cleaning their waste streams and there was much wringing of hands and gnashing of teeth over this factor. However the situation had gotten out of hand to the point where some industrialised rivers were routinely catching fire, and incidents like Love Canal (remember that?) and mercury poisoned kids in Minamata energized the public to the point where commercial objections were overridden. While the cleanup is far from complete, it is easy to see that this was a very successful protest.

Earlier in the Fifties, London was being poisoned by coal burning for heat, and that too led to a change in policy, and one cannot forget that cars now burn fuel cleaner than they did as well due to public pressure. The point here being that strict economic arguments against change which were rampant, did not stop the process once the public got its teeth in the bit. We must generate the same sort of broad interest in AGW as a precursor to more nuclear.

To me the advantage of fossil fuels is they are easy to “start” – just set a light to them.
But are nuclear plants, once built, not so easy to start? Once the fuel rods are in, then pulling out the control rods should restart the reaction, is that correct?
What I’m getting at is the ease of re-starting a nuclear reactor. I don’t mean procedurally, I mean physically. Once the reactor is in place, is it basically as easy to restart as setting a match to fossil fuels? Because if it is I would have thought fossil fuels have no great advantage.

The overnight costs for a NG generating plant are substantially lower than for a nuclear plant. Gas turbine prime movers are ‘off the shelf’ and the general complexity of the gas fired plant is far lower. It is true they can be stopped and restarted very easily, which is why they are used as ‘black start’ generators, and the output can be adjusted smoothly to follow demand. As I wrote, it is an ideal fuel if the external costs are ignored.

That is not to say that nuclear plants cannot load follow, and one expects that newer designs will have shorter restart intervals, but for the moment gas is the simplest and cheapest way to go, if environmental costs are forgiven.

DV8, I am a bit disappointed in you. You should have at least thrown in a caveat saying “at today’s prices” in there somewhere.

Or have you also been seduced by the drumbeat that horizontal drilling and fracking will ensure natural gas prices will stay low in North America for a long time? If so, I am being reminded of some Warren Buffett-isms:

“Be fearful when others are greedy and greedy when others are fearful” – In this case, in regards to investing, fear could refer to the ‘fear’ that natural gas (NG) prices will stay low for a long, long time.

(very roughly) “A rosy consensus is very expensive” – In this instance, the consensus is that NG prices will remain low.

From my perspective, cheap natural gas is assured only up until about the start of hurricane season.

I believe that I covered this in the prior post. To reiterate: fuel costs do not mean that much to generators that must choose between NG and nuclear, as any rise in the price of fuel can be passed on to the consumer. While the high probability of higher prices would motivate ratepayers, the fact is that with the current separation between those producing electricity, and the utilities that are the final re-sellers, the ratepayer has little say in the matter in most markets.

Right now North America is awash with gas. Canadian suppliers can’t sell what they can produce, as ramped-up US domestic production has made the export market very competitive. While I don’t think the current price will hold over the long term, I can’t see a sudden increase of any significant degree in the short term.

A moderate increase could occur during the summer months if a hurricane were to hit the Louisiana/Texas coast and temporarily shut down some production.

A much bigger increase could occur in the next winter, if the temperatures across North America get to some extreme lows. Looking at EIA data, winter total NG usage is considerably higher than summer total NG usage. I see the spread between the seasons shrinking with new CCGT plants coming online and fuel switching for ground transportation being induced by the presently low price.

Looking 3-5 years out, I personally don’t see the price of NG being anywhere close to as low as it is now.

One of the best arguments I have heard against using natural gas for generating baseload electricity, is that we need all the natural gas we can get to turn over long distance shipping, trucks and aircraft, to reduce petroleum consumption there. While natural gas reserves are sufficient, we simply cannot produce enough natural gas fast enough to displace coal AND petroleum. It’s not how much gas is in the ground, its how fast we can suck it out. If nuclear is used in stead of baseload gas plants, we free up enough natural gas for shipping and aircraft while having enough for making fertilizer too.

Almost everyone will agree with this, even those who don’t care about GhG.

Our governments seem not to care about workers killed from methane explosions.
Our governments were never serious about Global Warming.
Natural gas solves all the other pollution concerns associated with coal.
Economics in the U.S. seriously favors natural gas.

My right wingnut friends complain about the new EPA regulations on CO2 emissions from power plants, and claim that’s aimed at preventing new coal power plants. They are wrong. There was never going to be another coal plant built in the U.S. anyway.

Natural gas plants require far less upfront capital expense than any other type of electrical generation. The merchant power model means natural gas plants are always going to be able to charge enough to cover their costs – they no longer need to care if the price of gas goes up or down.

Improvements in fracking have everyone convinced there will be plentiful cheap natural gas for the rest of our lives, and our children’s lives, and our grandchildren’s lives. Unless that turns out to be untrue, it will be very difficult for any other power generation technology to compete.

There are several fallacies in the cheap natural gas forever argument.

1. Producers are moving drilling rigs and fracking support technology to seek oil instead of gas. That is simple economics – why seek to produce a product with a low sales price when you can produce one that has a much higher margin between cost and price. Some drillers are simply closing up shop, waiting for better prices.

2. Cheap gas encourages additional consumers to enter the market. Again, that is pure economics. More consumers and more consumption from existing customers means that demand will increase as supply availability slows due to the effect of paragraph 1.

3. The total resource base is also questionable. The optimistic Potential Gas Committee says that there are just 2170 trillion cubic feet of natural gas in the US. At 26 TCF per year, that means that the very last puff will come out within the lifetime of my already living granddaughter. (84 years)

Expounding on Rod’s number 2 here, just look at the major recent push to convert a portion of ground transportation to CNG and/or LNG, with the T. Boone Pickens/Clean Energy Fuels Natural Gas Highway. Also, look at Cheniere Energy building an LNG export facility at Sabine Pass. Also look at the number of CCGT plants being built in America. I think TVA is starting one up in upper East Tennessee within about the next two months. Construction is soon to start on over 2,000 MW of CCGT plants in Texas being developed by Panda Power (http://pandafunds.com/Default.aspx?tabid=72).

That might become necessary, even just to keep some utilities in business.

Natural gas prices have been a major driver in setting the price of electricity in merchant markets, as (being typically in the past) the highest marginal cost fuel.

The dispatch order for plants across North America (typically based on marginal production cost) has likely been majorly, majorly disrupted over the past 6 months. I know for sure that it has been significantly altered within one particular utility that has recently operated their CCGT plants as if they were base-load, even in a low-demand portion of the year.

I seriously doubt all the ramifications of that are able to be predicted right now. I would imagine that there will be some utilities ill-suited to adjust quickly to the major change. I hope there aren’t any major issues that come about from CCGT plants being run as if they were base-load plants.

Because of the unrivalled energy density of nuclear power, it will ultimately prove to be cheaper and more scalable than any other energy source out there. Density is the primary consideration when evaluating the quality of energy sources, and nuclear remains king.

There is a topic worth discussing. In 2013, the Megatons for Megawatts program will end. Some predict an Uranium shortage and others not. One thing is for sure, if all the market information is properly priced in the 50$ a pound for Uranium these days, the shortage may not loom at all.

Does Russia have plenty more Uranium to recycle and will they surprise the market with an extension of the current deal? Cameco thinks not.

Germany may end up subsidizing nuclear energy in France, UK, Poland and Czech Republic. Indeed, some smart cookies from these 4 countries are trying to classify nuclear as a low emission source so that it will get subsidies from the EU, 20% of which would be cough up by … Germany. The law says that you can be green and technology neutral. You just have to prove that your dog food is low emission.

Their goal of these 4 countries: get the EU to reclassify nuclear energy as low-emission technology, a heavily subsidized category that includes solar and wind power; it would make nuclear power eligible for the same subsidies. Their argument: Europe’s commitment to shift to low-emission power generation by 2050 would have to be “technology neutral.” It’s the law.